All Forum Posts by: Peter M.

I will echo @Robert T. in that cash flow is the first priority. After that it is up to your own tolerance level and what the lenders will agree to. I try to stay about 50% right now but if the mother of all deals came along I would consider more as long as what I am leveraging still cash flows at the new payment.

You can create one property management LLC and one series LLC to hold each property in an individual series. The series LLC just holds the property and does no business with anyone. The leases are all in the name of the PM company which has a standard PM agreement with the owner i.e. your series LLC. It takes all the liability but since it holds no assets, if you get sued and lose, there is nothing the plaintiff can collect.

Your estimation of 3% may be right in your area but not for the reason you posted. As others said, look on the county assessor website and you will see all the taxes. Websites like realtor.com, Zillow, and redfin usually have the prior years taxed as well. New Jersey does have the highest tax rate but it is way more than 2.4%. That statistic is just the base state tax. Once you add in county, city, school, hospital, and all the other stuff the government tacks on it comes to much higher. I've seen probably the same website you are talking about and Texas usually comes in at about 28th near 1.6%. Well most cities around me are usually 2.5-3%. So to answer your second question, no that is not a safe way to estimate it. You should look it up for the area the potential flip is located. The title company will take care of the property taxes on both ends. This shouldn't be confused with income tax you will have to pay however. Flips are usually taxed as short term capital gains so when you do your taxes in April you will be paying for your success as well. Just set aside 20-30% of the profit you make on each flip to have ready come tax time.

Whatever you get tenants will find a way to destroy. I go with coil type. You can replace the pans and coils when they get damaged. I also try to get the basic units with no digital buttons or displays besides the clock.

You can do either but you will have better luck with your own agent usually. Due to agency rules most listing agents will not agree to represent you (unless they are familiar with investors, typical RE agents are not that creative). But agents have an obligation to present all offers to their clients even if they are lowballs. Plus, unless you know the contract really well, you should use an agent starting out until you know what the contract should look like. 

Go FHA, better yet do 203k then refinance out of it in a few years. Use the extra money for another property or as reserves until you build up enough for the next property.

I recommend doing the PM yourself. You will learn more that way. As an engineer in O&G myself, believe me, you will be able to handle it. Besides, a competent PM doesn't want to babysit you through the process. A bad one might but you will get frustrated and end up doing it yourself anyway. Hit me up if you have questions. Wylie is a bit of a drive for me but I've been known to get up that way every now and again. 

I would probably be okay with it. Just make sure they understand that they will all get an eviction filed in their name not just the bad one. Require one complete payment, dont let them pay separately, they will police each other.

I just type up documents as I go and update them when tenants find new ways to break things. I currently have parking rules, rent payment guide, and a maintenance troubleshooting guide for common problems. I also provide the move in move out checklist as well as a blank form for the tenant to notify me in writing whether they will renew the lease or not.

Can you have the seller pay your contractors ahead of time? You would really have to trust your contractors that they would not take the money and run. You said you have to close next week but can the seller just do the repairs now? I'm not familiar with the FHA rules but when I bought my house with a VA loan I got a check at closing because I increased the purchase price by the same amount that I asked for in seller closing credits. Luckily it appraised.